By John Biver
Good pension news? Yes, actually. No, I’m not referring to the Pat Quinn ludicrous $15 BILLION dollar borrowing plan. (Happy New Year! Here’s more unaffordable debt!) What I am referring to are headlines from around the country.
First a word about Quinn’s $15B more-debt idea: Thank you Illinois Republican Party “leadership” in Illinois. Your failure to set an agenda and sell it to the voters for the past eight years has cost current and future taxpayers a great deal of money.
I realize there are a handful of General Assembly members who understand both what’s wrong and what needs to change within their caucuses – but most remain clueless. If any of the clueless would like to learn what has to be done differently, click here and here.
Now to those good news stories: national attention is rising about the problem of public sector unions and lavish pay, benefit, and pension packages for government employees.
The NEXT 10 City Pensions That Will Run Out Of Money
The first total municipal pension default happened last week… Hundreds of cities could be right behind. Projections by Robert Novy-Marx and Joshua Rauh show the average city has $15,000 per household in unfunded pension liabilities. These massive liabilities are ignored by common government accounting.
Chicago is #2 on that list above, but Illinois is #1 on this list:
And Now, Here’s The First 11 State Pension Funds That Will Run Out Of Money
Business Insider posted this picture with this caption. UPDATE - since I copied the photo and caption they’ve removed the caption.
Slate and the Heritage Foundation provide us the good news from Washington, D.C. This is from Slate.com:
House Republicans are ready for war against public sector unions.
Inside the article is this:
“I’m going to introduce a resolution when the new Congress begins, stating that the House will not bail out state budgets,” says Rep. Jason Chaffetz, R-Utah. “The message is: States, don’t think the federal government is going to bail you out. Pay attention to this now.”
And this is from the Heritage Foundation:
Heritage Foundation scholar David John [provides the] details: “For instance, Chicago has only about $22 billion in pension assets to pay for $66 billion in pension promises to its city workers… That means that every household in Chicago has a liability of about $42,000 just to pay pensions to city workers…
The problem is even worse at the state level… Â Unsustainable public employee compensation is a major reason why large states like California, Illinois, and New York are teetering on the brink of insolvency.
[David John warns]: “State and local governments made the mess of their finances, and they should have to clean them up. Congress should provide a mechanism to make the process more direct, giving the states the flexibility to address their fiscal problems consistent with federalism and the principles of limited constitutional government.”
One more – here are excerpts from a good Investor’s Business Daily editorial:
Isn’t it time that legislators outlaw collective bargaining for public-sector workers?
Working for the government as a member of a union is an easy path to prosperity… [W]hen measured as total compensation per hour, state and local government wages are 45% higher ($39.66) than private-sector wages ($27.42).
To understand the problem created by high wages and gold-plated benefits for public sector workers, one needs only to read the work of Chris Edwards writing in the Winter 2010 issue of the Cato Journal:
“In 2008, the total cost of wages and benefits for state and local workers was $1.1 trillion, which was half of the $2.2 trillion in total spending by state and local governments.” In highly unionized states, the ratio is far worse…
Take a moment to digest that. Then move on with us to Edwards’ next statement:
“Compensation costs are expected to rise rapidly in coming years due to growing pension and health care costs.”
Here’s the close of the IBDÂ editorial (attention Illinois GOP legislators!):
Today’s lawmakers need to unravel a series of grave mistakes made by their predecessors.
